Memories are short and the instinct to make a profit is strong. The retail investor is already coming back into the stock market.
Of course, most investors missed the first move up. Now that the market has doubled off the bottom, many investors are now scaling back in on every dip. However, many investors continue to abandon the market, as the market rises and they break even.
Thus, I think that we are range bound. There is substantial overhead resistance and strong buying on the dips. The American economy is still very weak, so interest rates will remain low.
American companies that do substantial global business can prosper. For example, YUM just reported excellent profits selling fried chicken to the Chinese. CAT is knocking the cover off the ball.
Mlevine, you probably have a good feel for CAT based upon their base of operations. Keep up the flow on them. Good company.
We have a local am eve weekday talk about the market. Have been listening to these two guys for years, run a local investment firm. Called the top in 2007, spoke of the coming crash due to Fannie/Freddie in Dec of 2007, then called the meltdown of 2008 starting in Jan of that year. They were dead on. They regularly call short term tops and bottoms one-two weeks out.
Last night, they were talking about upcoming bumps-in-road, along with sideways trading for next 18-20 years due to huge overhang of country's debt. They estimate that we are at 350% debt-GDP, estimated we need to be at 200% to get rolling again. Which is what is impeding GDP growth now, the deleveraging that is taking place.
Strong probability that housing is going back into the toilet with decreasing LTV. Folks will stop paying if they get upside down. They are looking at investors primarily. Which would lead to another round of securities defaults, bank writedowns.
These guys say that traders, not buy-hold, is the way to go for the next few years. They don't advocate it, they prefer private equity investments to grow wealth IF you are involved in the business.
These are stock guys saying that cash provides a better return than the market (again, unless you play short term swings). They do equate this period to the 1930s. Apparently, the folks in the 30s didn't call it the "Depression", just a really bad recession, followed by a second one in the 30s.